Is Outsourcing an Ethical Practice?

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Outsourcing is the practice of hiring outside your business, or getting an individual to perform contracted work as opposed to paying your employees to do the work.

Many businesses use outsourcing to:

Reduce costs
Focus on their core business
Resolve capacity issues
Enhance service quality
Access to intellectual capital

Business alike use outsourcing as a means to get added expertise and exploit the cost of labour advantages. This is an ethical area as it covers a lot of grey areas, and with the rise of globalisation, outsourcing is put in the spotlight.

What are the Ethical Implications of Outsourcing?
Is Outsourcing an Ethical Practice?
What are the Ethical Issues of Outsourcing?
Why is Outsourcing Unethical?
What are some Ethical Practices?
What are some Unethical Practices?
Are There Any Ethical Dilemmas Associated With Outsourcing?
What Are The 5 Ethical Issues?
What Are Ethical Business Practices?
What Are The Risks of Outsourcing?
What Are The Examples of Ethical Behavior?
What Are The 7 Principles of Ethics?
Who Benefits From Outsourcing?
How do You Promote Ethical Behavior in The Workplace?
What Are Ethical Requirements?
What is The Most Important Reason to be Ethical in Business?
Ethical Issues of Outsourcing or Offshoring
What are the Pros and Cons of Outsourcing?

What are the Ethical Implications of Outsourcing?

Globalisation

As we are increasingly getting more global, outsourcing has some negative connotations. Some believe that businesses have an obligation to protect jobs within the country. However, globalisation has made outsourcing an attractive strategy.

Not only does it reduce the overheads of employing someone full time, but we are finding that businesses are adapting their strategy to outsourcing as a means of accessing industry professionals and furthering innovation.

While it is a part of a strategy of competitive planning, businesses must strike a balance between quality management and cost-effective measures.

Sweatshops

A major reason some people immediately dislike getting their supply from overseas is that they associate this practice with sweatshops, a term describing manufacturing facilities in foreign nations where employees — sometimes even children — receive unfair wages and poor working environments.

Companies that often outsource from these foreign conditions become the centre of public relations backlash. Big corporations aren’t spared either. Nike is still trying to shake off their reputation for exploiting sweatshop users, and other retailers like Adidas, Converse, Abercrombie and Fitch, Victoria’s Secret and Billabong have come under scrutiny.

Without a doubt, globalisation has exacerbated the problems with sweatshops. When world markets are opened to free trade, businesses race to offer the best at the cheapest cost.

Without international standards and regulations, large corporations move their manufacturing plants to countries with fewer restrictions to meet the growing consumer demand. In an attempt to keep costs low, factories provide the minimum wage and ignore workplace safety requirements.

An alternative solution: ethical sourcing

To combat the stigma against outsourcing, businesses are turning towards ethical sourcing.

Ethical sourcing means the business ensures that the products they source are obtained in a responsible and sustainable way, the workers involved are treated fairly.

Environmental and social impacts are taken into consideration with ethical sourcing. Ethical sourcing has become important for mitigating operational risk and upholding a good brand reputation.

Outsourcing and further implications

Some businesses face media and public scrutiny whether outsourcing domestically or abroad, especially during periods of high unemployment. Ethical or not, this pressure stems from the perspective of some people that a business should promote employment rather than choosing lower-cost contractor relationships.

The way a company treats its outsourcing partners has ethical considerations as well. In general, your business practices reflect on your business partners as well as your own company image. Outsourcing puts pressure on your business to monitor and maintain high-quality standards if you want customers to perceive you as a top provider.

The continued global pursuit of low-cost sources of supply and ethical sourcing responsibility will remain high on the agenda. If businesses fail to source fairly or ethically, they can run the risk of consumer backlash, resulting in mass boycotting of products and services.

Many companies use outsourcing based on expertise and cost-of-labor advantages. As with other ethical areas, discussing outsourcing ethics covers a lot of gray areas. Globalization contributes to the debate.

Outsourcing and Pro-American Sentiment

From a global perspective, the mere utterance of the word “outsourcing” sometimes incites controversy, according to the University of New Mexico. Some people believe companies have a moral obligation to protect jobs for Americans above all else.

Outsourcing often serves as a major topic of debate during presidential elections, as both parties suggest that their candidate is more equipped to preserve American jobs and boost domestic employment.

Companies sometimes use ads to point out when competitors hire a significant amount of foreign workers. The goal is to invoke pro-American sentiment and to hammer the image of the targeted business.

On the Surface

The simple practice of outsourcing certain elements of a business operation fits into the free enterprise system. As part of strategic competitive planning, companies must strike a balance between quality processes and affordability. Outsourcing isn’t always a global move.

Some small businesses outsource transportation and logistics domestically, for instance. In general, outsourcing simply means you find it more beneficial to contract out tasks rather than hire full-time staff, which doesn’t seem to compromise company ethics.

The “Sweat Shop” Problem

One of the main negative implications of outsourcing is that some people immediately frown upon outsourcing is the first thing they associate with this practice is sweat shops – a slang expression used to describe manufacturing facilities in foreign nations where employees receive unfair wages and work in poor conditions, relative to American laws and ethical standards.

Companies that source products from these foreign firms often become the center of public relations firestorms, according to Unleashed. Nike famously had to overcome image issues in the late 1990s when it first detached itself from “sweat shop” criticism, but then advocated higher standards when massive public boycotts hurt the company.

Other Implications

During periods of high unemployment, some companies face media and public scrutiny whether outsourcing domestically or abroad. Fair or not, this pressure on outsourcing ethical issues stems from the perspective of some citizens that a business should promote employment rather than choosing lower-cost contractor relationships.

The way a company treats its outsourcing partners has ethical considerations as well. In general, your business practices reflect on your associates as well as your own company image.

The pros and cons of outsourcing puts pressure on your business to monitor and maintain high-quality standards if you want customers to perceive you as a top provider.

What are the Ethical Issues of Outsourcing?

Outsourcing non-core activities helps companies save considerably on costs and improve profitability. Outsourcing work is recognized as a competitive strategy for success. However, companies have concerns about the ethics of outsourcing practices at the vendor location.

Concerns regarding ethics in outsourcing practices

Security Concerns: The core concern of outsourcing ethics is confidential information security. Companies need to be concerned about the security systems in place and about the safety of electronic data storage. If your outsourcing partner does not have adequate information about security measures, it might be a good idea to stay clear of them
Fall in Service Quality: There is concern that services delivered from half-way across the globe might not meet quality expectations. Companies looking to outsource should check the track record of the vendor and their technical competencies
Environmental Issues: Companies are concerned that vendor companies may practice environmentally damaging processes. They may need to conduct periodic audits to ensure compliance
Poor Work Environment at Vendor Location: Companies have to impose stringent standards on the work conditions at offshore locations. They need to conduct intermittent audits on the work conditions and review the HR policies of offshore vendors

Why is Outsourcing Unethical?

Many large and small companies, including those in the start-up stage, are continuously outsourcing most of their business processes. These companies have various reasons for doing so. Primarily, they intent to cut personnel costs or they would like to double their outputs in the same amount of time.

Even though it remains as a growing and evolving trend in most industries today, there are some who feel that business process outsourcing is unethical. Here are the primary reasons why they think business process outsourcing is unethical.

It leads to job loss

More specifically, the jobs that should have been given to locals are outsourced to other places and even abroad. As a result, unemployed locals will settle for low wage or underpaid jobs to compensate for the daily living expenses.

It involves inappropriate work environment

Most outsourcing companies, especially those that are in the start-up phase, have poor work environments. Instead of feeling comfortable and inspired to produce higher quality of products/outputs, employees are provided with a poorly ventilated space. This is considered unethical by many because the poor employees have no choice but to settle with the uncomfortable workspace.

Work hours in night or graveyard shift

Business process outsourcing companies that cater to business abroad have their employees work in the same time zone with that of their clients. Hence, most outsourcing employees work at the night or graveyard shift. This is unethical to some because of the health effects it may bring to the employees.

Despite these issues, others still don’t think that business process outsourcing is unethical. In fact, business process outsourcing continues to thrive and progress. Large and established outsourcing companies are not hampered nor affected by these issues because they make sure that they treat their employees well and generate more job opportunities.

Well, it’s up to you to decide whether business process outsourcing is ethical or unethical. However, whether it will be depicted as ethical or unethical, one thing will remain. Business process outsourcing will continue to be a friend and ally to businesses.

What are some Ethical Practices?

Examples of ethical behaviors in the workplace includes; obeying the company’s rules, effective communication, taking responsibility, accountability, professionalism, trust and mutual respect for your colleagues at work.

These examples of ethical behaviors ensures maximum productivity output at work. And could be pivotal for career growth.

1. Obey The Company’s Rules & Regulation

At the start of an employee contract, companies may need the employee to sign various documents, including the company rules and regulation agreement form. Also, the employee may be given a handbook that may serve as a guide.

Some common rules are tardiness, inappropriate dressing, and language, etc. Due to the excitement of getting a new job, some employees do not properly read these rules and may end up deferring them in the future.

Therefore, it is important that new employees properly read these rules & regulations in other not to defer them.

2. Communicate Effectively

Effective communication is very important to avoid misunderstandings when dealing with issues in the workplace. Communicating effectively may mean different things to people at different points in time.

Let us consider the hypothetical situation of an employee trying to relay information to a French-speaking customer. The best way to communicate effectively with the customer is to have an employee who can speak French relay the information.

Effective communication may also have an employee breaking one of the rules and regulations of the company without getting penalized for it. An employee reaching out to HR that they will be coming in late due to some unforeseen circumstances may be spared for coming late if the situation is properly communicated.

3. Develop Professional Relationships

Good professional relationships are not only a thing that fosters teamwork among employees, but also help with individual career development for employees. Developing professional relationships with coworkers or other professionals outside the workplace will also directly or indirectly improve productivity.

Professional relationships between low-level and high-level employees will make it easier for ideas to be shared and knowledge to be passed to junior employees. That way, the company can confidently have an intern work on a tough project to meet a pending deadline due to the guidance from older employees.

Salespeople, for one, need to build external professional relationships with professionals from other organizations—especially those who are potential clients. These relationships will help create a contact person in another organization in case they need to sell a product to them.

4. Take Responsibility

It is important for employees to always take responsibility for decisions made both individually and in a team. This is, in fact, a leadership trait that every employee who is looking to take up a managerial position in the future should exhibit.

Understandably, employees may want to save their job and are therefore scared of taking responsibility for a particular event. However, they shouldn’t let this fear take them.out of the team.

For example, the communications team came up with a marketing strategy for the company and it failed. The team members are to jointly take responsibility for this failure, not individuals coming out that they weren’t part of the decision making process.

If the strategy has gone the other way round, they wouldn’t have said the same.

5. Professionalism/Standards

There are professional standards that everything an employee does in the workplace. The use of informal words in a formal workplace is highly unprofessional.

These standards should be held high and applied to every part of an employee’s activity in the workplace. This should include the way they speak, kind of work they deliver and their relationship with coworkers and customers.

6. Be Accountable

Accountability is also a very good trait of an employee. One of the things that may short change a talented and responsible is the lack of accountability.

Lack of accountability may result in your boss thinking you have an “I don’t care attitude” to the company’s project or worst take you as a liar and may lead to job loss in the long run. For example, at the beginning of each year, a certain amount of money is allocated to each department.

The manager is meant to oversee how this money is spent. If at the end of the year, the manager can not make an account of how the money was spent, he may then be suspected of stealing company funds.

7. Uphold Trust

An employee should not do anything that may make his or her employee withdraw trust. As an employee of a company, your employee trusts you to get work done perfectly on time.

Things like missing deadlines regularly or delivering work that needs to be revised over and over again will deny you a promotion. It may even leave the employer not giving you tasks to complete in the future—a nightmare for freelancers.

8. Show Initiative without being told

Is the company running behind deadline and you feel you can stay a few extra hours after work to finish up? Do it.

You are a freelance designer and your client wants a particular poster designed but doesn’t have a copywriter to write the content. If you can write the contents, do so. Don’t delay a client’s work because of a few contents.

9. Respect Your Colleagues

It doesn’t matter whether you are dealing with the intern, a junior, janitor, etc. they should all be treated with respect. As a manager, treating your team members with respect will help improve their productivity.

Giving constructive criticism and saying kind words to them even when they are not able to deliver perfectly will help them strive to do better in the future.

10. Work Smarter

Don’t just work hard, work smarter. The reason why you see an employee promoted to the post of manager after just 2 years and a hardworking employee who has been with the company for 10 years failed to get a promotion is smart work.

Assume that these 2 employees are data scientists who collect data and analyze them. A smarter employee will use the Formplus data collection tool to collect data and receive real-time data analytics, while a hard-working employee will print paper-based forms and do the hard work of sharing it to respondents.

What are some Unethical Practices?

1. Lies

Lying is a trait that is detested in and outside the workplace. It kills trust, affects relationships and may even put people in trouble.

There are different situations where employees lie in the workplace—with just one lie opening the floor for many others. It could be a sales manager lying about the number of clients they were able to get in a month or an employee calling in sick just to attend another job interview.

A lot of employees start lying from their CV, by adding experiences they didn’t acquire, and the skills they don’t have. Employees need to understand that lying about work may eventually get them in trouble and needs to stop before they lose their job.

However, we notice that employees lie due to fear of their employer—an employee will call in sick to go for interviews because companies frown against employees interviewing at another company.

HR should put up a more friendly culture that will encourage people to progress in their careers taking up other jobs and even support them throughout the process.

2. Taking Credit for Others Hard Work

It is very common for managers to take credit for their team member’s hard work when reporting to the management. A team member may have brought an idea that helped the sales team improve their sales by 200%.

However, when giving a report, the manager doesn’t mention the team member’s name but claims the idea as his. Employees need to reduce the use of “I”, but embrace the use of ” We”.

By taking credit for another person’s work, you will be denying the person a promotion, bonus or commendation for a job well done. This will discourage the person from sharing ideas that will benefit the company in the future.

3. Verbal Harassment/Abuse

Employees need to stay away from using foul language on coworkers in and out of the workplace. This is very important when dealing with customers.

Customers are known to get angry and may result in verbal abuse due to a bad product or service. They may even get insult you when they are at fault.

As a customer care representative, salesperson or any other employee, it is beth important that you don’t use abusive words on customers no matter how provoked.

4. Violence

Similar to verbal harassment, employees should not be violent when dealing with coworkers and customers. Customers may likely provoke you, but it is better to keep shut and walk away rather than turn violent.

5. Non-Office Related Work

A lot of employees have side hustles which they use to supplement salaries. This is very good and only very few companies are against employees working to make money outside work hours.

However, some employees still do non-office related work during office hours. Employees who have side hustles should try doing them on weekends or employing other people to handle some of the business logistics to avoid eating into office hours to get the work done.

6. Extended Breaks

Companies give lunch breaks to employees and people take advantage of these breaks to do other things outside office work like, go for interviews, meet with friends or even work on their side hustles. They are free to do whatever they want these lunch breaks.

Employees, however, take advantage of these lunch breaks and extend them beyond time.

7. Theft/Embezzlement

Some employees are known for diverting company funds into their bank accounts—padding project quotations, invoices, etc. to deceive the company on how much was spent on particular projects.

This act is detrimental to the company because employees who steal sometimes replace quality products with counterfeits which are cheaper but causes damage in the future.

8. Sexual Harassment

Sexual harassment is an offense that is not limited to the workplace alone. An employee accused of sexual harassment will not only face consequences in the workplace but also tried at a court of law.

Many companies have a zero-tolerance rate for sexual harassment in and outside the workplace. This may tarnish the company’s reputation and the only way to curb is to make an example of defaulters.

9. Corrupt Practices

Some common causes of corruption can be seen during the employment process of an organization. They invite so many people to send their CVs and come for interviews but only people with the same political affiliation with them get the job.

This is also common with companies that ask for contractors to bid for a project but the employees will only give them to their friends who may not even bid at all.

Management/Employers Unethical Behaviors

Workplace ethics is not for employees alone. Employers are also bound to workplace ethics and may also be tried for unethical behavior.

1. Sex for Job/Promotion

It is common for managers, employers and major decision-makers to use their position in the workplace to influence the hiring decision in exchange for sex.

2. Late Night Out/Unpaid Overtime

Some employers take advantage of desperate job seekers and the competitive job market to use employees’ leisure time as they wish. They do so with the mentality that they are doing employees a favor by employing them, not knowing that the favor is mutual.

Employees who are scared of queries or job loss are not able to protest the infringement into their private time by the employer.

3. Verbal Harassment

It is common among employers to verbally harass employees when they make little mistakes. This will reduce employee morale and productivity.

Employers should always say kind words to their employees.

4. Undue Pressure

Deadlines are a great way to make sure the work gets done on time. However, when employees are placed under undue pressure, they end up trading quality for on-time delivery.

An example of undue pressure will be giving an employee a 1-day deadline for a project that would normally take a week.

5. Nepotism

This is a common type of corruption that happens in the workplace. An employee who has been working hard for years while influencing company growth may get sidelined for a promotion because of another employee who is a family friend, family or friend of the employer.

Things like this are what reduces employee morale or even push talented employees from drop a resignation.

6. Unfriendly Work Environment

One of the things that can mar productivity is an unfriendly working environment. This may come as a combination of abusive bosses, lack of commendation, nepotism, etc. An unfriendly environment is an environment that combines various unethical behaviors into one.

7. Unrealistic Expectations

Creatives usually have it worse when it comes to having unrealistic expectations from employees.

Are There Any Ethical Dilemmas Associated With Outsourcing?

Security Concerns: The core concern of outsourcing ethics is confidential information security. Companies need to be concerned about the security systems in place and about the safety of electronic data storage. If your outsourcing partner does not have adequate information about security measures, it might be a good idea to stay clear of them
Fall in Service Quality: There is concern that services delivered from half-way across the globe might not meet quality expectations. Companies looking to outsource should check the track record of the vendor and their technical competencies
Environmental Issues: Companies are concerned that vendor companies may practice environmentally damaging processes. They may need to conduct periodic audits to ensure compliance
Poor Work Environment at Vendor Location: Companies have to impose stringent standards on the work conditions at offshore locations. They need to conduct intermittent audits on the work conditions and review the HR policies of offshore vendors

What Are The 5 Ethical Issues?

Here are five ethically questionable issues you may face in the workplace and how you can respond.

Unethical Leadership

Having a personal issue with your boss is one thing, but reporting to a person who is behaving unethically is another. This may come in an obvious form, like manipulating numbers in a report or spending company money on inappropriate activities; however, it can also occur more subtly, in the form of bullying, accepting inappropriate gifts from suppliers, or asking you to skip a standard procedure just once.

With studies indicating that managers are responsible for 60% of workplace misconduct, the abuse of leadership authority is an unfortunate reality.

Toxic Workplace Culture

Organizations helmed by unethical leadership are more often than not plagued by a toxic workplace culture. Leaders who think nothing of taking bribes, manipulating sales figures and data or pressuring employees or business associates for “favors” (whether they be personal or financial), will think nothing of disrespecting and bullying their employees.

With the current emphasis in many organizations to hire for “cultural fit,” a toxic culture can be exacerbated by continually repopulating the company with like-minded personalities and toxic mentalities. Even worse, hiring for “cultural fit” can become a smokescreen for discrimination, which can result in more ethical issues and legal ramifications.

Discrimination and Harassment

Laws require organizations to be equal employment opportunity employers. Organizations must recruit a diverse workforce, enforce policies and training that support an equal opportunity program, and foster an environment that is respectful of all types of people. Unfortunately, there are still many whose practices break with EEOC guidelines.

When discrimination and harassment of employees based on race, ethnicity, gender, disability or age occurs, not only has an ethical line been crossed but a legal one as well.

Most companies are vigilant to avoid the costly legal and public ramifications of discrimination and harassment, so you may encounter this ethical dilemma in more subtle ways, from seemingly “harmless” off-color jokes by a manager to a more pervasive “group think” mentality that can be a symptom of a toxic culture.

This could be a group mentality toward an “other” group (for example, women aren’t a good fit for our group). Your best response is to maintain your personal values and repel such intolerant, unethical or illegal group norms by offering an alternative, inclusive perspective as the best choice for the group and the organization.

Unrealistic and Conflicting Goals

Your organization sets a goal—it could be a monthly sales figure or product production number—that seems unrealistic, even unattainable. While not unethical in and of itself (after all, having driven leadership with aggressive company goals is crucial to innovation and growth), it’s how employees, and even some leaders, go about reaching the goal that could raise an ethical red flag.

Unrealistic objectives can spur leaders to put undue pressure on their employees, and employees may consider cutting corners or breaching ethical or legal guidelines to obtain them.

Cutting corners ethically is a shortcut that rarely pays off, and if your entire team or department is failing to meet goals, company leadership needs that feedback to revisit those goals and re-evaluate performance expectations.

Questionable Use of Company Technology

While this may feel like a minor blip in the grand scheme of workplace ethics, the improper use of the internet and company technology is a huge cost for organizations in lost time, worker productivity and company dollars. One survey found that 64% of employees visit non-work related websites during the workday.

Not only is it a misuse of company tools and technology, but it’s also a misuse of company time. Whether you’re taking hourly breaks to check your social media news feed or know that your coworker is using company technology resources to work on freelance jobs, this “little white lie” of workplace ethics can create a snowball effect.

The response to this one is simple: when you’re working on the company’s computer on the company’s time, just don’t do it, even as tempting as it may be.

What Are Ethical Business Practices?

To become an ethical company, it’s necessary to follow a few key ethical business practices. These will be applicable to your situation no matter what ethical issues you may face.

1. Define Your Values

Everyone at your organization needs to be familiar with your business values. The best place to include these values is the employee handbook, under a code of ethics section. When writing this section, be as clear as possible to avoid any opportunity for misinterpretation.

A code of ethics is critical for everyone at your company, but it’s most important for those in a leadership position. Leaders should refer to your values when making important decisions, such as implementing a new strategy or dealing with employees. Your values are critical for everything from hiring and firing to figuring out how to improve operations.

To communicate your values with a wider audience, include a mission statement on your website. Creating a short statement will help you whittle down your values into a succinct description. This is important for making sure your values are easy to remember and apply.

Plus, it helps you tailor your values to employees, rather than to regulators. To ensure your mission statement does serve its purpose, think about what makes your business unique and avoid stating the obvious.

2. Decide On Appropriate Disciplinary Action

There will be times when employees fail to adhere to your ethical standards. It’s crucial to be consistent with disciplinary action and ensure the punishment does fit the crime.

Create a set of policies from the start and enforce the rules. This will demonstrate that you stand by your values and have no tolerance for unethical behavior. It will also show employees what to expect if they are considering acting inappropriately.

3. Hold Your Leaders to High Standards

Leaders have great influence over their subordinates. By holding your leaders to a high standard, you show your employees what you expect from everyone and inspire each individual to act with integrity. This will also help you to develop future leaders in your current employees.

4. Incentivize Ethical Behavior

To increase ethical behavior, you need to use rewards as well as punishment. A reward can be as simple as praise in the face of good behavior — particularly when it would be easy for an employee to act unethically.

Another option is to use a reward program, such as employee of the month. Most programs rely on pro-self bonuses, but you may see even better results if you use prosocial bonuses.

For instance, you could encourage winners to use their bonuses to treat the rest of their team or you could donate the bonus to a charity of their choice. The benefit of this strategy is that it promotes good behavior in the short term and leads to a lasting sense of having done something important.

Non-financial incentives are also effective — often far more than business owners believe they will be. Just reminding employees of how actions can impact other people can incentivize them to make the ethically-right decision. Alternatively, you can emphasize how behaving ethically will ultimately improve the employees’ own lives.

5. Keep Ethics Top of Mind

Everyone from leaders to entry-level employees will behave more ethically if you frequently remind them of your company values. They’ll be less likely to justify an action that (deep down) they know is ethically wrong.

There are many ways to create constant reminders of values. One thing to do is to include an honor code at the beginning of forms. Too often, companies need to check a box and sign after they’ve already completed a form. By this point, it’s too late to change anything if the person has already provided dishonest information.

6. Become Active in Your Community

Just because you’re a for-profit company doesn’t mean everything you do needs to be about making money. Volunteering in your community can be a humbling experience and it can serve as a reminder to everyone at your company that other activities are perhaps more important than what your business is doing. You’ll also show customers that you care about enriching the lives of others.

7. Hire a Diverse Range of Employees

More companies are trying to increase diversity in their workforce — and their reasons extend beyond creating a better public image. Hiring employees from a diverse range of backgrounds brings a wider variety of perspectives. Not only will you receive fresh ideas for solving problems, you may even avoid introducing unforeseen problems into your products and services.

8. Monitor Your Suppliers

It’s important to hold suppliers and other professionals you outsource to the same standards as your own employees. Choose suppliers whose values align with your own. It may we worthwhile to go so far as to vet them to ensure they are behaving ethically.

What Are The Risks of Outsourcing?

Here are the top 10 risks of outsourcing:

1. Loss of Control

The biggest risk of outsourcing is the lack of control.

A business process that was previously executed by the in-house team when outsourced to external agencies leaves you with little to no control over it. And when mismanaged by the service provider, it can affect the quality of the outsourced service.

Additionally, the level of control depends on the geographic distance of the vendor. With a larger distance, in-person meetings and inspections become difficult, leaving you to rely on virtual communication services.

This can make performance and productivity monitoring challenging. It also makes it quite difficult to collaborate with offshore vendors.

2. Communication Barriers

Regardless of the type of video conferencing tool you would be using, it is more difficult to communicate over phone and video calls than in-person — especially in offshore outsourcing. But with time, even if you work around it, there are scheduling issues to consider.

For example, if you hire a remote team from the Philippines for IT outsourcing, then either you will have to clock in early to accommodate their working hour, or they’ll need to work in the middle of the night to be present during your working hours.

And what if you don’t follow this? You’ll need to wait a whole day to meet up, which only translates to wasted time! Moreover, if something goes wrong with your software, then you can’t just walk to the next desk to discuss it with your vendor.

This leaves you with the only option of virtual communication. So you would have to either send an email or a message to communicate, which can make software outsourcing less efficient.

3. Unforeseen and Hidden Costs

The main motive behind outsourcing is gaining a competitive advantage through cost savings and profitability. However, if it leads to any hidden cost then it becomes a risk.

Before outsourcing a service, compare the vendor pricing with current in-house development costs along with all the additional expenses. This gives a rough idea of the vendor charges.

However, later in the development project phase, you can get hit with unforeseen costs like:

Hardware or software upgrades.
Relocation or redeployment.
After-hours services.
Troubleshooting

All of these add up to the total cost of the project, pushing it beyond its original budget.

4. Difficult to Find the Perfect Vendor

Picking the right vendor or service provider is tricky. They need to have the required skill sets and expertise for the job.

But along with that, you need to consider a few other things like:

Does the vendor have access to the latest technology?
Are they experienced in solving complex problems?
Are they passionate about your project?
Are they in a different time zone? Then, do you have common working hours?

That’s a long list of requirements — and it can vary from organization to organization. Additionally, your outsourcing partner should be flexible enough to tend to urgent issues.

This becomes an even bigger setback if your outsourcing partner is in a different time zone because, with each ticking second of unsolved problems, you’re losing money.

5. Privacy and Security Concerns

When you’re outsourcing to any service organization, you completely or partially expose your business assets to an outsider.

That is why you need to pay attention to privacy, intellectual property, and data protection. This involves copyrights, patents, trade secrets, and more.

Though the chances are low if you hire a reputed vendor, there’s always a possibility that the third-party organization might steal/leak valuable information or trade secrets. This concern multiplies when you are hiring someone from another country who does not abide by the laws of your own country.

For example, if a member of the outsourced software development team steals the code from your company, it can become quite troubling. How will you take legal action across borders?

6. Lack of Experience with Remote Teams

Managing a remote team can be more complicated than in theory. And the contractor’s expertise plays a crucial role in rightfully managing a remote team.

You need to keep a few things in mind, like:

Constant check-ins on results.
Have effective communication.
Provide regular feedback.
Appreciate their efforts.

Failure to do so can create a communication gap between you and your outsourced team. They might find the job redundant and would be less engaged with the project.

A mismanaged and unmotivated remote team can lead to unmet deadlines, unhappy customers, and eventually, stressed employees.

7. Outsourcing a Key Product

Outsourcing your key product is a crucial decision to make.

By hiring an offshore company to work on your core project you become dependent upon an outside vendor. And while outsourcing is cost-effective and makes the job easier, you eventually start to lose your product expertise and core competency.

So it’s better to hire expert individuals like engineers or analysts who can lead your team to improve your product rather than offshoring your entire product.

8. Vendor Failure to Deliver or Constant Delays

Outsourcing services revolve around a general rule called the 4x rule. What’s the 4x rule?

It means that it will take four times as long to accomplish an outsourced functionquoted by the organization or remote employee. The delay could be due to things like miscommunication, inaccuracies, communication lag, and more.

While it’s not always the case, stick to the 4x rule under circumstances like:

When you’re adjusting to new software.
When your processes aren’t running smoothly.
When you are onboarding a new remote employee.

However, on the brighter side, once you’re more organized and enough time has passed, you’ll see significant improvement in terms of work times and deliverable times.

9. Quality of the Outsourced Product

All businesses aim to deliver quality products as quickly as possible. And when you’re asking for help from a third-party, you need to extend the same commitments.

It’s not necessary for the outsourcing provider to be familiar with the know-how of your business like your in-house employees do. A case of quality failure in a physical product can be more severe if you’ve hired an offshore service provider.

Why is that?

An international source will have a longer production and transportation time than a domestic one. This can directly impact the time it would take to rectify the concerning issue.

10. Geolocation

With communication becoming easier with growing technology, distance seems hardly an issue. But if you narrow it down, the efficiency of your outsourcing service depends upon the type of service you’re hiring.

For example, if you outsource IT services, you don’t need to factor in the distance, but for a physical good, the geolocation of the service provider matters.

How?

Distance translates to transportation costs. The greater the distance, the higher the transportation cost. You’ll also need to travel a great distance for inspections and frequent check-ins won’t be feasible every time. Additionally, if you’re unprepared for a quality or supply chain problem, it might take more time to fix it.

What Are The Examples of Ethical Behavior?

Ethical behavior includes honesty, integrity, fairness and a variety of other positive traits. Those who have others’ interests in mind when they make decisions are displaying ethical behavior.

In the workplace, there might be a standard for ethics set throughout the company. Many organizations create a code of ethics, which might include generic guidelines for ethical behavior about doing the right thing or remaining fair. It could also mention specific protocol within the business.

For example, a code of ethics at a doctor’s office might include putting the patient first and remaining understanding in tough situations. At a college, a code of ethics could include being honest and unbiased when grading and being a catalyst for diverse perspectives in the classroom.

Obey The Company’s Rules & Regulation

Therefore, it is important that new employees properly read these rules & regulations in other not to defer them.

Communicate Effectively

Develop Professional Relationships

Take Responsibility

Understandably, employees may want to save their job and are therefore scared of taking responsibility for a particular event. However, they shouldn’t let this fear take them.out of the team.

If the strategy has gone the other way round, they wouldn’t have said the same.

Professionalism/Standards

There are professional standards that everything an employee does in the workplace. The use of informal words in a formal workplace is highly unprofessional.

Be Accountable

Accountability is also a very good trait of an employee. One of the things that may short change a talented and responsible is the lack of accountability.

The manager is meant to oversee how this money is spent. If at the end of the year, the manager can not make an account of how the money was spent, he may then be suspected of stealing company funds.

Uphold Trust

An employee should not do anything that may make his or her employee withdraw trust. As an employee of a company, your employee trusts you to get work done perfectly on time.

Show Initiative without being told

Is the company running behind deadline and you feel you can stay a few extra hours after work to finish up? Do it.

Respect Your Colleagues

Giving constructive criticism and saying kind words to them even when they are not able to deliver perfectly will help them strive to do better in the future.

Work Smarter

What Are The 7 Principles of Ethics?

1. HONESTY. Be honest in all communications and actions. Ethical executives are, above all, worthy of trust and honesty is the cornerstone of trust. They are not only truthful, they are candid and forthright.

Ethical executives do not deliberately mislead or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means and when trust requires it they supply relevant information andcorrect misapprehensions of fact.

2. INTEGRITY. Maintain personal integrity. Ethical executives earn the trust of others through personal integrity. Integrity refers to a wholeness of character demonstrated by consistency between thoughts, words and actions.

Maintaining integrity often requires moral courage, the inner strength to do the right thing even when it may cost more than they want to pay.

The live by ethical principles despite great pressure to do otherwise. Ethical executives are principled, honorable, upright and scrupulous. They fight for their beliefs and do not sacrifice principle for expediency.

3. PROMISE-KEEPING. Keep promises and fulfill commitments. Ethical executives can be trusted because they make every reasonable effort to fulfill the letter and spirit of their promises and commitments.

They do not interpret agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create justifications for escaping their commitments.

4. LOYALTY. Be loyal within the framework of other ethical principles. Ethical executives justify trust by being loyal to their organization and the people they work with. Ethical executives place a high value on protecting and advancing the lawful and legitimate interests of their companies and their colleagues.

They do not, however, put their loyalty above other ethical principles or use loyalty to others as an excuse for unprincipled conduct. Ethical executives demonstrate loyalty by safeguarding their ability to make independent professional judgments.

They avoid conflicts of interest and they do not use or disclose information learned in confidence for personal advantage. If they decide to accept other employment, ethical executives provide reasonable notice, respect the proprietary information of their former employer, and refuse to engage in any activities that take undue advantage of their previous positions.

5. FAIRNESS. Strive to be fair and just in all dealings. Ethical executives are fundamentally committed to fairness. They do not exercise power arbitrarily nor do they use overreaching or indecent means to gain or maintain any advantage nor take undue advantage of another’s mistakes or difficulties.

Ethical executives manifest a commitment to justice, the equal treatment of individuals, tolerance for and acceptance of diversity. They are open-minded; willing to admit they are wrong and, where appropriate, they change their positions and beliefs.

6. CARING. Demonstrate compassion and a genuine concern for the well-being of others. Ethical executives are caring, compassionate, benevolent and kind. They understand the concept of stakeholders (those who have a stake in a decision because they are affected by it) and they always consider the business, financial and emotional consequences of their actions on all stakeholders.

Ethical executives seek to accomplish their business objectives in a manner that causes the least harm and the greatest positive good.

7. RESPECT FOR OTHERS. Treat everyone with respect.Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights, and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect and dignity regardless of sex, race or national origin.

Ethical executives adhere to the Golden Rule, striving to treat others the way they would like to be treated.

Who Benefits From Outsourcing?

Who benefits from outsourcing? Executives, of course: CEOs at the 50 biggest U.S. outsourcers generally receive more in compensation than do chiefs who are less bullish about outsourcing.

From the perspective of some business constituencies, however, the benefits of outsourcing seem questionable, at best. End users, for example, report having to fight their way through several levels of bureaucratic indirection, and almost all are putting up with longer lag times in response to support calls.

How do You Promote Ethical Behavior in The Workplace?

How can managers help create a more ethical workplace culture? Leadership and talent development consultant Steve Nguyen summarizes a list of practices for management to accomplish this goal.

Be a Role Model and Be Visible

Employees look at top managers to understand what behavior is acceptable. Senior management sets the tone for ethics in the workplace.

Communicate Ethical Expectations

An organizational code of ethics can reduce ethical ambiguities. The code of ethics should state the organization’s primary values and the ethical rules that employees are expected to follow. Managers should remember that a code of ethics is worthless if leaders fail to model ethical behaviors.

Offer Ethics Training

Managers should set up seminars, workshops and similar programs to promote ethics in the workplace. Training sessions reinforce the organization’s standards of conduct, to clarify what practices are and are not permissible, and to address possible ethical dilemmas.

Visibly Reward Ethical Acts and Punish Unethical Ones

Performance appraisals of managers should include evaluations of how actions measure up against the organization’s code of ethics. Appraisals need to include how managers achieve these goals, as well as the goals themselves.

Provide Protective Mechanisms

The organization needs to provide formal mechanisms that allow employees to discuss ethical dilemmas and report unethical behavior without fear of reprimand. This could include developing roles for ethical counselors, ombudsmen or ethical officers.

What Are Ethical Requirements?

Business is all about work ethic. Work ethic involves being honest, adhering to laws, conflict management, being fair, confidentiality, professional behavior, etc.

1. The Importance Of Professional Competence

Intelligence doesn’t determine success, your work ethic does. For example, if you do not set a regular schedule and work accordingly, you will end up working too much some days and accomplishing nothing on others.

This will result in a huge pile up of tasks with you having no idea on how to progress. Not just this, if your employees are not honest, you have no clue on where you are with a specific business operation.

Moreover, if an employee doesn’t adhere to rules, it will affect the work of others in your company. In addition to that, your employees should trust you.

To assure proper ethics in place, you will require a code of conduct certificate from your previous employers. If you are a member of non-profits or business organizations that conduct festivals, a code of conduct certificate issued by them will suffice.

2. Dealing With Non-Adherence Of Employees

There are bound to be discrepancies while handling businesses and some of them can be misconduct on the part of your employees. As the director of your business, you will need to be prepared to handle such situations. You can take the help of your legal team to come up with policies that are fair and just. You can present a copy to get accreditation.

Such a policy should include a process on how complaints are received, how the complaint is processed to be valid or not, how the relevant person is notified and asked to address the issue, how to solve the problem and the process to formulate a plan if ever there is a re-occurrence of the same kind of discrepancy.

3. Conflicts Of Interest Policy

Conflicts of Interest policies deal situations in which the personal interests of an employee are in conflict with the interest of the organization. As an employer, you should have dedicated responsibility to identify such situations and should also have proper legislation to handle the same.

This policy should be fair and should safeguard the fundamental rights of your employee. It should also not damage the reputation of your organization.

The features of this policy determine the moral standards of your organization. A copy of this should be handed over for accreditation.

4. Confidentiality Procedures

Every business withstands on the confidentiality of their Intel. However, it is entirely possible for such Intel to be misused. Your organization should not only safeguard but also know how to deal with espionage. You will need policies in place for this too. All legal documentation should be verified by a legal expert. Again, a copy of these policies will help you to get accredited.

If you have no idea on how to begin preparing such policies, then you have to appoint a lawyer. They consult with standardization bodies and use their framework to create quality legal processes. This will help you conduct your business better and gain the trust of more customers.

What is The Most Important Reason to be Ethical in Business?

Having good ethics should be just as important as any other business characteristic; the importance of good ethics should be seen in much the same way the business community has recognised the importance of a good company culture on the success of a business.

Good ethics help to build a stronger business, offering benefits not just externally, but also internally to staff and the company as a whole.

Here are just 5 of the ways business ethics can help your business:

1. Decision Making

Operating with good ethics helps in decision making. Ethical practices benefit businesses as a whole to make less short-term decisions that may result in long-term business failure; and more decisions that are likely to support the long-term success of the business.

Having poor ethics has directly played a role in the demise of many companies, Enron is a famous example of a company with poor ethics, a toxic culture that led directly to the ultimate collapse of the company.

In the space of a year Enron went from being considered one of the most innovative companies of the late 20th century to being synonymous of corruption.

2. Staff & Ethics

Research suggests 42% of the workforce want to work for an organisation that has a positive impact on the world.

A company with a proper focus on ethics is more likely to retain their team as they have a vested interest and a growing affinity for the business. Good working practices and ethics inspire a feeling of purpose to every staff members role. All of which makes growth and success a more likely long-term outcome.

There is a growing number of politically engaged job seekers who require more than a reasonable wage and a company focused on profit; they require their employer to hold embody values that align with their own and an ethical business model.

Ignoring this trend could mean cutting your business off from a large percentage of the workforce.

3. Customers

“In choosing one brand over another, consumers are already worried they’ve made the wrong choice; It’s never been more vital for salespeople to show spotless ethical standards.” – Ethical Leadership in a Global World.

You may believe that business ethics has no place in a customers purchase decision but on the contrary. In a similar manner to company culture, customers like to be associated with companies with a positive image; this includes a reputation for good ethical trading.

A reputation for ethical behaviour is a trust building tool with customers, it brings in both new and repeat business as it helps to communicate your business identity before you reach the point of sale.

4. Branding

Branding can also benefit from ethical business policies. Brands such as Toms have benefited from a positive brand image and association based purely on their business ethics.

This isn’t an exercise in creating a corporate facade and painting a pretty enough picture of your business to emotionally connect. Consumers are wise to brands who sell themselves on the basis of being ethical but don’t necessarily practice what they preach; this tends to come to light at some point and cause more damage than good.

Consider Brands such as ‘LUSH’ who don’t actively market or heavily brand themselves with the terms ‘Ethical’, ‘Eco’ or ‘Sustainable’ and instead conduct business ethically and in turn are regarded in customers minds as being eco-friendly and sustainable nonetheless.

5. Just Do it!

Ethically running your business is the right thing to do. No, this is not radical optimism or a naive bias. Many entrepreneurs can attest to the strains of setting up, running and growing their business; it’s an arduous journey.

Running your business often bleeds quite seamlessly into your personal life, over time this can take its toll. Having a bigger picture, and a slightly altruistic reason for staying the course can add that extra 5% of motivation you need to keep going.

Good ethics play a significant role in your business decisions, staffing, branding, motivation, customer retention and so much more. Having a strong ethical core to your business can directly affect the strength of your company as a whole, and it’s future.

Every day decisions made in your business will shape its future. Make sure your fellow founders, employees and partners are all aligned with this ethical core to make it a real part of your companies DNA.

Good ethics are vital, and as businesses become more transparent (willingly or not), there is an even greater need. There is an upward trend toward enterprises that place ethics an ethical business practices at their core; one which you could benefit from also.

It’s not enough to just market your business as ethical; it’s important to set this out as part of all training, and documentation to communicate the message and improve buy-in across your business.

Ethical Issues of Outsourcing or Offshoring

Outsourcing Lowers Barriers to Entry and Increases Competition

While increased competition is encouraged by free markets and generally benefits consumers, it can hurt businesses that can’t keep up. Outsourcing allows new entrants to industries where labor would have been too expensive otherwise.

A startup company seeking to manufacture electronic devices might not be able to get off the ground if it had to hire American factory workers, but can now easily find eager and cheap skilled laborers abroad. Barriers to entry that once existed due to the capital requirements needed at the startup phase can be greatly reduced.

Early movers in an industry to outsource will have a competitive advantage initially, but that advantage will continue to be eroded as more competitors follow suit, and newcomers are incentivized to join. Once everybody is participating, the initial advantage is removed completely.

Outsourcing also encourages new competition by causing fragmentation and disintegration of the supply chain. In other words, new entrants can arise to exploit the fact that manufacturing may take place in a different geographic region from product design and customer support in yet another region.

Each part of a business is effectively subcontracted out, and that means that any new company can hire those same contractors (or competitors of those subcontractors) and produce identical items for around the same cost as the big players.

Outsourcing Erodes Company Loyalty

If a worker knows that their job may be outsourced to cheaper foreign labor at any given moment, they may lose confidence in their employer and become discouraged. As outsourcing has grown from unskilled jobs to include administrative and intellectual positions, even managerial level employees cannot be certain that their jobs are safe and secure. Workplace satisfaction and worker productivity can be negatively impacted.

Additionally, if an employee, or group of employees, decides that they are being treated unfairly or are being underpaid, they can leave to start their own company in direct competition with their former employer. This possibility is more likely than ever before because of outsourcing’s lower barriers to entry.

Consumers can also be turned off by outsourcing. The most ubiquitous case is the outsourcing of customer support or technical support to places like India. When customers hear a foreign accent answer their call to an American company, they may lose trust in the company and could even blame that company for eliminating American jobs.

The situation becomes even more sensitive when customers have to share medical or financial information with strangers overseas. Customers may band together to boycott these companies or spread negative sentiments through social media.

Outsourcing Can Eliminate Jobs From the Domestic Workforce

While there is much debate as to whether or not outsourcing causes unemployment or actually adds jobs to the economy, it is obvious that it does eliminate certain kinds of work. Presumably, those workers who lose those jobs go on to get better jobs in new industries or through better training and education.

Manufacturing jobs are a prime example. Today, much of what is made by American companies actually gets produced in foreign factories. While it is true that U.S. manufacturing as a contributor to gross domestic product (GDP) has not changed much, the types of manufacturing jobs in America today are not the same as they used to be.

Today’s U.S. factory jobs are dominated by information technology, robotics, precision machines, and engineering. The low-skilled jobs involving repetitive manual labor have been outsourced either to cheap labor abroad or to technology.

As a result, entire towns and communities that relied on assembly lines and factories have become virtual ghost towns. The so-called Rust Belt is a prime example of this phenomenon. It refers to the staggering economic decline, population loss, and urban decay caused primarily by shrinking the domestic industrial sector throughout the Northeast, Mid-Atlantic, and Midwest.

Outsourcing Affects Insourced Countries

The rise of the Chinese middle class in the past few decades has been attributed, in part, to its rise as a global exporting powerhouse. But as more work is outsourced to that country, Chinese workers will begin to demand higher pay.

The ripple effect predicts that China’s competitive low-wage advantage will eventually be eliminated, and the boost to economic production that resulted will also depart.

Outsourcing also takes labor out of the workforce of a country and sets laborers to work doing tasks that may not be critical to their own country’s development or growth, but pays better nonetheless. People may be enticed to leave agrarian or cottage industries to earn more money in a city as a call center operator.

And what happens when there are no more cheap labor regions to exploit? Companies may then turn to technology to replace workers causing unemployment of unskilled labor abroad as well as at home.

The influx of investment from abroad, especially for manufacturing, can also lead to a glut of factories that spit out pollution and carbon dioxide into the atmosphere, negatively affecting the health of workers and nearby communities.

To try to offset the increase in pollution, China is planning to institute a national emissions trading system, whereby CO2 credits can be traded with other countries.

What are the Pros and Cons of Outsourcing?

So what are the pros and cons of outsourcing? Take a look at our list.

Pros

1. Outsourcing can increase company profits

Companies generally decide to outsource the production of goods and services if they think it can save them money and, by doing so, increase company profits. The most frequently cited example of this has to do with labor costs.

Companies might outsource and/or offshore to a country that has lower labor costs. While some might see the local job loss as a negative effect of outsourcing, the increased profits that can result are hard for companies to resist.

Companies may also outsource to save themselves the expense of training and hiring all in-house employees, or to scale their business.

2. Outsourcing can increase economic efficiency

Sometimes companies outsource because of the opportunity costs of doing or producing a good or service themselves. For example, a CEO of a tech startup might outsource HR because she feels her time would be better spent meeting with venture capitalists and getting her tech team up to speed than with managing employee benefits.

When highly skilled people can outsource lower-value tasks and spend more time at high-value tasks, businesses tend to benefit. Proponents of outsourcing say that it can also increase overall efficiency in the economy by distributing tasks to people who have the appropriate skill level for those tasks and letting highly skilled workers be more productive.

3. Outsourcing can distribute jobs from developed countries to developing countries

Some defenders of outsourcing say it’s true that outsourcing to foreign countries (and offshoring) results in the loss of some U.S. jobs but that less-developed nations benefit and that those benefits outweigh the costs to rich countries like the United States.

Americans might object to this, they say, but outsourcing can lead to higher wages and more job opportunities in the developing countries to which U.S. firms outsource. Some analysts view this as an advantage, saying that over time it can narrow the gap between rich countries and poor countries.

4. Outsourcing can strengthen international ties

Some experts feel that the more countries trade with each other the less likely they are to go to war with each other and the more easily they can cooperate in pursuit of shared goals.

To the extent that outsourcing strengthens relationships between companies in two or more countries, it might also strengthen the relationships between the governments of those countries.

Cons

1. U.S. job loss

The drawback to outsourcing that gets the most press is the loss of jobs in the U.S. (or whichever country is doing the outsourcing). The fact that workers in other countries may be getting job opportunities they hadn’t had before is little comfort to members of, say, U.S. manufacturing communities hit hard by factory closures.

2. Lack of transparency

More and more, consumers want to know where their products came from and who made them. Outsourcing makes this kind of transparency difficult. A U.S. company might outsource part of its business to a company in, say, Bangladesh, which might also outsource to another Bangladesh company for staffing.

So if the staff at a Bangladesh factory is working in unsafe conditions, is that the fault of the staffing company, the Bangladesh manufacturing company, the U.S. clothing company or all three? Outsourcing makes it harder to follow the money and labor to gain insight into a company’s supply chain.

3. Labor and environmental standards may slip

Some critics of outsourcing say that it leads to a general slippage in the labor and environmental standards that apply to the goods and services Americans consume. This is a critique that’s often cited by opponents of NAFTA.

If a U.S. company outsources to a country with lower wages, more lax labor laws or lower environmental standards, the resulting good or service may not be up to the standards that the U.S. government has agreed should apply in our country. That’s not just a problem for U.S. consumers who want to feel good about where their products come from.

It’s also a problem for workers in other countries who can’t get the wages they need to succeed and communities who feel the impact of pollution overseas.

Plus, it increases the net contribution to climate change if more goods are produced in countries with lower environmental standards. Outsourcing may also crowd out local small businesses and small farms in developing countries.

4. It can backfire for the outsourcing company

Outsourcing isn’t always a money-saving home run for the companies that do it. They might find that the company they’ve outsourced to misses deadlines, doesn’t perform well or otherwise has a negative effect on business.

There may be communication problems or costs might exceed expectations. For smaller companies in particular, outsourcing can be a gamble.

Final Thoughts

Outsourcing is a complicated issue that tends to provoke strong reactions. Your feelings about the issue might change based on where you live, where you work and whose opinions you read or listen to, but it’s good to have the basic arguments for and against outsourcing in the back of your mind when you hear about it in political debates.

As we are increasingly doing business in a more globalised manner, outsourcing is becoming more important to maintain a competitive advantage in highly competitive industries.

There are many of benefits to outsourcing but it is important to understand the implications of outsourcing and in doing so, outsource ethically and fairly.